Electricity Generation with Looped Transmission Networks: Bidding to an ISO

Xinmin Hu, Daniel Ralph, Eric K. Ralph, Peter Bardsley and Michael C. Ferris
Authors registered in the RePEc Author Service: Eric Kodjo Ralph and Daniel Ralph

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper uses a bi-level game to model markets for delivery of electrical power on looped transmission networks. It analyzes the effectiveness of an independent system operator (ISO) when generators (and, in some cases, retailers) with market power bid a single parameter of their linear supply (demand) functions to the ISO. The ISO, taking these bids at face value, maximizes welfare subject to transmission constraints. We find that equilibrium outcomes are sensitive to firms’ strategy spaces: 1. In the presence of transmission congestion and loop flows, supply function equilibria (SFE) are not bounded from above by Cournot equilibria, so Cournot outcomes may be more effcient than SFE, a difference that can be accentuated by increasing the number of rivals at a given node; 2. Allocation of transmission rights to generators can reduce effciency; and 3. Countervailing power on the part of buyers can lower effciency.

Keywords: electricity market; nodal pricing; locational marginal pricing; supply function equilibria; bilevel game; bilevel program (search for similar items in EconPapers)
JEL-codes: C61 C63 D43 L51 L94 (search for similar items in EconPapers)
Pages: 31
Date: 2004-11
New Economics Papers: this item is included in nep-net
Note: CMI, IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.econ.cam.ac.uk/electricity/publications/wp/ep65.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.econ.cam.ac.uk/electricity/publications/wp/ep65.pdf [301 Moved Permanently]--> https://www.econ.cam.ac.uk/electricity/publications/wp/ep65.pdf)

Related works:
Working Paper: Electricity Generation with Looped Transmission Networks: Bidding to an ISO (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0470

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().